The tax filing deadline is approaching but it’s not too late to reduce your tax bill and/or boost your retirement savings. A contribution to either a traditional or a Roth IRA can accomplish one or both of those objectives.
If you think that you will be in a lower tax bracket in retirement and your income is too high to contribute to a Roth IRA, than a traditional IRA is a good investment choice. There are no income restrictions for contributing to a traditional IRA. Contributions may or may not be tax deductible depending on your circumstances, and you must begin to take distributions at age 70 ½.
In contrast, investing in a Roth IRA allows you to grow earnings tax-free, and qualified withdrawals are also tax-free as long as you meet certain requirements. This is an advantage to those that think they will be in a higher tax bracket when they retire. Contributions to a Roth IRA may be limited based on income, but there are no required distributions.
Current IRA contribution limits are at $5,500 or $6,500 for someone age 50 or older, and the deadline for making a 2018 contribution is April 15, 2019.